USD/JPY Bulls Eye 144 on China Inflation Ahead of the US CPI Report

Highlights

• It is another busy start to the day, with consumer price inflation and producer price index numbers from China in focus.
• Later in the session, Fed commentary will need consideration as investors begin looking toward the US CPI Report out on Thursday.
• The near-term technical indicators are bullish, signaling a return to 144.

On Tuesday, the USD/JPY rose by 0.61% to wrap up the day at 143.361. Softer wage growth figures from Japan weighed on the Yen.

This morning, there are no economic indicators from Japan to draw interest. However, China’s consumer price inflation and producer price index figures will move the dial. A more marked decline in the producer price index would align with the July trade data and Caixin Manufacturing PMI, reflecting a weakening demand environment.

The US Session

There are no US economic indicators to move the dial this afternoon. However, investors should monitor the news wires for Fed chatter with the media ahead of the US CPI Report out on Thursday.

USD/JPY Price Action

Daily Chart

The Daily Chart showed the USD/JPY above the 141.9 – 141.2 support band. After the bullish Tuesday session, the USD/JPY remained above 50-day (140.880) and 200-day (137.252) EMAs, sending bullish near and longer-term price signals.

Notably, the 50-day EMA pulled further away from the 200-day EMA, signaling further price gains.

Looking at the 14-Daily RSI, the 58.48 reading offers a bullish outlook, supporting a return to 143.5 and a run at the 144.3 – 145.0 resistance band. However, a USD/JPY fall through the 141.9 – 141.2 support band would bring the 50-day EMA (140.880) into play.

4-Hourly Chart

Looking at the 4-Hourly Chart, the USD/JPY faces strong resistance at 143.5. The USD/JPY sits above the 141.9 – 141.3 support band and the 50-day (142.301) and 200-day (141.354) EMAs, sending bullish near and longer-term price signals. Significantly, the 50-day EMA pulled away from the 200-day EMA, signaling further gains.

A hold above the 50-day EMA and the 141.9 – 141.2 support band would support a run at the 144.3 – 145.0 resistance band. However, a fall through the 50-day EMA (142.301) would send the USD/JPY through the 141.9 – 141.2 support band and the 200-day EMA ($141.354) to sub-141.

The 14-4H RSI reading of 59.31 sends bullish signals, with buying pressure outweighing selling pressure. Significantly, the RSI aligns with the 50-day EMA, supporting a run at the 144.3 – 145.0 resistance band.